Up to Swan on dividend decision:Stevens

RESERVE Bank governor Glenn Stevens said that while he would have preferred to build up the central bank's reserves, Treasurer Wayne Swan was entitled to take a $500 million dividend for the 2011/12 financial year.

Mr Stevens told the House of Representatives economic committee on Friday that the bank's reserves have been depleted by the effects of the rise in the Australian dollar.

"It is certainly my desire to rebuild the capital over time and the only way we can rebuild it is to retain some of the earnings when we make positive earnings," he said.

He said while his advice to the treasurer was that he wanted to retain all of the bank's $1.096 billion of earnings in 2011/12, Mr Swan didn't agree.

"That's his prerogative," Mr Stevens said.

"I believe the prudent and best course is to rebuild that reserve as quickly as we can but I am not subject to the other pressures that the government is.

"They have a range of prudent considerations they have to make that extend far more broadly than the Reserve Bank and that is the treasurer's prerogative."

He said it was not purely up to him what happens to the dividend and the fund.

"The decision the treasurer has taken is perfectly prudent. (But) I don't regard it as the absolutely best ideal from the RBA's perspective."